By a brief Order announced on February 26, 2018, the NLRB overturned its precedent on joint employer for the second time in a span of almost two months. Specifically, the Board vacated the decision Hy-Brand Contractors Ltd., 365 NLRB No. 156 (2017), which, in turn, had overruled the joint employer standard announced in Browning Ferris Industries, 362 NLRB No. 186 (2015) (“BFI”). By vacating Hy-Brand, the Board has returned to a joint employer standard based not only on “direct” control over employees, but also “indirect” or “reserved” control.
But, why did the Board overturn its decision so quickly? Ever since the Hy-Brand decision in December 2017, there had been questions regarding the involvement of recent Republican Board appointee, William Emanuel, due to his former firm representing one of the employers in BFI. Democratic Senators had raised alarm bells about Emanuel’s participation in the decision, but the direct impetus for the Board’s vacating order came from an NLRB Inspector General report. The IG report, cited in a footnote of the order, found that Emanuel should not have participated in the decision, and generally questioned the Board’s recusal process. In response, and presumably to try to ensure the decision could stand on appeal, the Board decided to vacate Hy-Brand.
What happens next? The Order does not specifically outline the next steps. It only states that the matter will be addressed in “further proceedings” before the Board. At present there are 2 Democratic appointees and 2 Republican appointees, and a third Republican appointment, John Ring, awaiting hearings and a vote in the Senate on his confirmation to the Board. Thus, with Emanuel’s participation hampered by the IG report, the matter would come before the Board with a Democratic-leaning majority if decided now. Consequently, this could mean that the decision will be vacated permanently and the BFI standard will reign for the foreseeable future.
However, the Board may opt to sit on the decision while it seeks input from interested groups – e.g., unions and employer associations – on the joint employer standard. This is something that the Democratic appointees charged that the Republican-majority failed to do in reaching their decision in Hy-Brand. If the Board issues an opportunity for briefs from interested parties, the case could be delayed with time for Ring to be confirmed. However, the Democratic appointees are sure to resist such a delay, so the procedural next steps are not clear.
Lastly, what does this mean for employers and unions? For now, the joint employer standard has returned to BFI, which means that two employers (or other entities) could be found jointly liable for collective bargaining with a union and/or unfair labor practice charges before the NLRB if they “share or codetermine” wages and working conditions. This is a far more lenient standard than the “direct and immediate control” test that existed for decades prior to BFI and can be sure to ensnare unwitting employers into becoming “joint employers” based on indirect control.
Overall, vacating Hy-Brand introduces yet another element of uncertainty in the debate over joint employer status.
Andrew MacDonald is an associate in the firm’s Labor and Employment Department, resident in its Philadelphia office.